GM shows revamped Escalade to keep large SUV a `fantasy’

General Motors Co. (GM)’s Escalade, the large sport-utility vehicle that fueled the imagery of rap music and fictional gangsters, is getting a makeover.

GM tonight displayed a redesigned 2015 Cadillac Escalade in New York with a sleeker exterior and a wood-trim interior that are among the changes that the Detroit-based automaker has made to boost sales of the large luxury SUV.

“The 2015 Escalade is completely new and elevated in design and technology,” Bob Ferguson, head of Cadillac, said in a statement today. “The clear objective is to once again assume the leadership position among luxury SUVs.”

The Escalade is one of 10 new or redesigned Cadillacs that GM is bringing out in the U.S. by the end of 2015. The product push includes the ATS, a compact sedan, which has helped increase Cadillac U.S. sales 29 percent this year through September.

U.S. sales of the all versions of the Escalade, which peaked in 2004 at 62,250, fell to 23,340 last year, according to researcher Autodata Corp. Sales of Daimler AG (DAI)’s Mercedes-Benz GL, a seven-seat SUV, rose 3.6 percent last year to 26,042.

Escalade faces more competition from high-end SUVs in coming years. Fiat SpA (F)’s Maserati plans production of the Levante SUV in 2015 while Volkswagen AG (VOW)’s Bentley has said it will start selling the world’s most expensive SUV at about 180,000 euros ($244,000) in three years. Rolls-Royce Motor Cars Ltd., the ultra-luxury-car maker owned by Bayerische Motoren Werke AG (BMW), has also said it is considering an SUV.

‘Big Threat’

The current Escalade starts at $63,745 with a fully loaded version costing about $90,000, according to GM. The price of the 2015 model, which starts production in next year’s second quarter, hasn’t been released.

“If people are spending that much money, they may opt for a more exotic sounding nameplate,” Jessica Caldwell, an analyst with Edmunds.com, a website that tracks auto sales, said. “That’s a big threat.”

The success of the Escalade, which was first introduced in October 1998, helped keep Cadillac culturally relevant as it attempted to reignite interest in the luxury brand the past 15 years.

Tony Soprano, the mob boss played by James Gandolfini, drove a Cadillac Escalade in HBO’s “The Sopranos.” Jennifer Lopez crowed about it. Ludacris even included it in his rap song “What’s Your Fantasy?”

‘A Statement’

“Anybody with power and who wanted to be noticed or make a statement without having to say anything, that’s what they drove,” Dave Sullivan, an analyst with AutoPacific Inc., said today in a telephone interview. The model “brought people in and got people to buy other Cadillacs even if they couldn’t afford an Escalade.”

Escalade, which was last redesigned in 2006, also faces competition from smaller, entry-level luxury SUVs, which are more fuel efficient, Caldwell said. At Escalade’s 2004 sales peak, gasoline averaged $1.81 a gallon in the U.S. compared with $3.55 last year, according to Edmunds.

“It’s people being honest with themselves and downsizing and not really needing the space that the Escalade has,” Caldwell said. “The Escalade is great for an executive, Town Car-like vehicle. But for a family it is a lot of space and fairly large to maintain and keep around.”
While the large SUV market has fallen, they remain profitable for the automaker. The SUVs are one of its strengths even as it has pushed to create some of its best sedans in generations, including the Chevrolet Impala, which Yonkers, New York-based Consumer Reports ranked best among all sedans.

Profit Margins

GM’s margins on the Escalade are probably 20 percent to 30 percent while a mid-size sedan like the Malibu might be 4 percent to 6 percent, Sullivan said. “It’s like a printing press” for money, he said.

The jumbo-size Escalade ESV’s average transaction price, or what a customer paid after incentives, rose to $76,126 this year through September compared with $57,117 in 2003, according to Edmunds. The average transaction price in the luxury large SUV segment rose to $80,981 this year with Land Rover’s Range Rover leading the pack at $105,505.

Escalade shares engineering with Chevrolet and GMC large SUVs, which are all built on the automaker’s truck platform that was redesigned in 2013. GM dominates the large non-luxury SUV segment. The combined segment market share of Chevy and GMC large SUVs in the U.S. rose to 61 percent this year through July compared with 58 percent in 2004, according to Edmunds. Ford Motor Co. (F)’s large SUV market share fell to 11 percent this year compared with 18 percent during all of 2004.

Richer Buyers

The Suburban-size Escalade ESV attracts a richer buyer than the Chevrolet Suburban, according to GM figures. The median household income of an Escalade ESV owner is $259,060 compared with $135,000 for the Suburban. The median income for buyers of the smaller Escalade is $178,222 which is higher than the $120,429 of the Cadillac brand, according to GM.

The regular Escalade is the size of a Chevrolet Tahoe.

The new Escalade’s interior is quieter and has seats engineered to be more comfortable and look more sculpted, GM said. The front seats have more than 1.5 inches (3.8 centimeters) of additional headroom and more than 4 inches of additional legroom than the outgoing model.

“It’s all in the details in that segment,” Caldwell said. “It has to be more of an upgrade in those so that you feel like you’re surrounding yourself in luxury amenities.”